Core Emballage Limited - Out of the Box

Abstract

Core Emballage Limited (CEL), Gujarat, India, reached a plateau in 2006 in its business of corrugated packaging solutions. Geographical expansion was not feasible. Although making marginal operating profits, CEL was weighed down by heavy depreciation and interest on loans. The idea of diversifying into unrelated nutraceuticals (nutritional healthcare products) cropped up during internal discussions. The management had to decide whether to go ahead and enter the field that normally required heavy investment in advertising and promotion. In the field were deeply entrenched, highly respected players such as Dabur and Himalaya. The company did not have spare cash; nor did it want to borrow money for marketing and promoting nutraceutical products. The management had to assess the company's reputational capital to see if it was strategically desirable to get into making and marketing nutraceuticals.